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CHICAGO-New York City-based Morgan Stanley Real Estate has entered into an agreement to purchase locally based AMLI Residential Properties Trust for $2.1 billion in cash. Through its $4.5 billion Prime Property Fund, Morgan Stanley will acquire all of AMLI's common shares for $37.75 per share.

Completion of the acquisition is expected during the first quarter of 2006. The buyout was unanimously approved by AMLI's board of trustees, which is expected to recommend that shareholders approve the transaction. Upon the transaction's closing, AMLI's management team will remain intact.

According to information released by the two companies, holders of limited partnership units in AMLI's operating partnership will receive $37.75 per unit in cash. The per share purchase price represents a 20.7% premium more than AMLI's closing price on October 21, 2005. The $2.1 billion price tag also includes AMLI's debt and preferred securities. Under the agreement, AMLI will continue to pay regular quarterly distributions at an annualized rate of $1.92 per share and per unit through the closing of the transaction.

"Multifamily is attractive because of its low volatility and higher risk-adjusted returns relative to other property types," Dave Hardman, managing director and head of US real estate investing at Morgan Stanley, said in a statement. Neither executives from Morgan Stanley nor AMLI could be reached for comment by press time.

JP Morgan Securities Inc. acted as financial adviser to AMLI, and Mayer, Brown, Rowe & Maw LLP provided legal advice. Morgan Stanley acted as financial advisor to Prime, and Davis Polk & Wardwell and King & Spalding LLP provided legal advice.

The AMLI portfolio currently includes 75 apartment communities containing 28,356 apartment homes, with an additional 827 apartment homes under development or in lease-up in three locations. The Prime fund is a $4.5 billion diversified core real estate fund managed by Morgan Stanley Real Estate.

Instant Insights /

Morgan Stanley's Prime Property Fund to Acquire AMLI for $2B

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